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Author Question: Explain why the average total cost curve and the average variable cost curve get closer to each ... (Read 73 times)

wenmo

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on: Jun 29, 2018
Explain why the average total cost curve and the average variable cost curve get closer to each other as output expands.
 
  What will be an ideal response?

Question 2

Explain three of the shortcomings of the free-enterprise system.
 
  What will be an ideal response?


dmurph1496

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Reply #1 on: Jun 29, 2018
Answer to Question 1

The reason the two curves get closer to each other as output expands has to do with the fact that average fixed costs fall with increases in output. Since the only thing separating average total costs from average variable costs is the average fixed cost it stands to reason that they two curves should become closer with output expansion.

Answer to Question 2

The shortcomings of the free-enterprise system are: products may not always be produced at lowest cost, income may be unevenly distributed, and periods of inflation and unemployment may recur.


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